Merrill, a Bank of America Company: Research & Insights

Merrill’s institutional research maintains a constructive outlook for 2026, driven by an expectation of double-digit S&P 500 earnings growth and resilient U.S. GDP expansion of 2.2%. Analysts argue that current market resilience persists despite geopolitical conflicts and energy price shocks, as structural tailwinds from artificial intelligence investment, productivity gains, and fiscal stimulus continue to support asset price reflation. While the firm maintains an overweight stance on U.S. Equities and Emerging Markets, it advocates for a tactical shift in portfolio construction due to the declining efficacy of traditional 60/40 diversification in an inflation-volatile environment. Specifically, the strategy committee suggests that higher yields remain tolerable, yet recommends integrating real assets and private markets to mitigate risks associated with stocks and bonds increasingly moving in tandem. Ultimately, Merrill’s research underscores a commitment to equities as the primary engine of growth while emphasizing a strategic pivot toward alternative asset classes to cushion against potential drawdowns.